The bad news: your tenant left owing you money.
The good news: you just won a money judgment in court against that tenant.
Time to celebrate?
Although you’re supposed to get the money your tenant owes you after you win a money judgment, actually getting the money is another matter.
It’s not always easy to collect money on a judgment.
The court’s job ends with the judgment. Collecting on that judgment is on you. Your ex-tenant might pay you immediately, and if so, great. Now it is time to celebrate. But what do you do if they don’t?
1. Ask for it
This simple solution often works. Draft a letter to your ex-tenant requesting the money.
- Let this person know what they owe you.
- Tell them if they don’t pay by X date, you will begin a collection process.
- Mention that if you begin a collection process, the transaction will appear on their credit report.
- You might wish to remind your ex-tenant that having a collection on their credit report will make it difficult to rent another place or to obtain a mortgage.
Many tenants, not wanting their credit affected, will pay.
2. Garnish wages
Almost every state allows wage garnishment, a process that allows creditors to take up to 25 percent of a debtor’s wages until the debt is paid. You must know where your ex-tenant works to do this. You might have this information on the application your ex-tenant filled out. The rest of the procedure varies by state, but typically, you do the following:
- Go to your local courthouse and ask for a garnishment order.
- This goes to your ex-tenant’s employer.
- The employer then withholds money from your ex-tenant’s paycheck until the debt is paid to you.
3. Garnish bank account
Similar to wage garnishment, you must know something about your ex-tenant—in this case where they bank—and ideally, their bank account number. You might have some bank information on the application your ex-tenant filled out, or you can get the information from a cancelled check. If your tenant paid you by check, then you have it. If not, you might be able to find someone who has received a check by your ex-tenant. You then go to your local courthouse and follow the procedure for garnishing the bank account.
4. Request information from the court
If you don’t know where your ex-tenant works or where they bank, you can request a formal procedure at your local courthouse, usually called a “debtor’s examination.” Your ex-tenant might then be ordered to fill out a form that lists their employer and bank information. Or they may be subpoenaed to appear before the court at a hearing to answer your questions. You will have the opportunity to find out the information you will need to collect money:
- Where they work
- The contact information of their employer
- Where they bank
- Their bank account number
5. Hire a collection agency
You’ll have to pay to use a collection agency, but recovering some of your money is better than receiving nothing. Unfortunately, the odds of a collection agent being successful in collecting money your tenant owes you are not that good. But you can increase your chances by hiring a recommended and reputable collection agency that specializes in working with landlords. Ask your lawyer, accountant, or other professional you know for a referral.
Related: The problem with collection agencies
The bottom line
Sure, you can collect on a judgment. But there’s no guarantee you’ll be successful or whether it will be worth your time and effort to pursue the money. Only you can make that determination based on how much your tenant owes you and on how busy you are. In most jurisdictions, you have between five and 20 years to collect. So if you’re not up to the job now, or if your ex-tenant has no assets at this time, you might be able to collect your money in the future.
The best course of action is to screen your tenants before renting to them. There’s no guarantee you won’t be burned when you screen tenants, but your chances of renting to a deadbeat tenant are lessened. Keep in mind that the Cozy tenant screening process is free for landlords, and I highly recommend it.